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The economic incoherence of George Bush

The recent trip by George Bush to Asia in which he preached the value of free trade and capitalism was of course widely reported in the media across the world. As a result, his remarks about the lowering of trade barriers are inevitably going to be thrown back in his face following the ludicrous imposition of 30% tariffs on steel imported into the USA.

Given that the underlying trend for steel imports into the USA has been downwards for years (down 30% over the last four) it is particularly bizarre that this politically motivated protectionism should have been allowed to happened. Of course this will also result in more expensive steel for the domestic US construction and manufacturing industry, it will cause retaliatory tariffs against US products overseas and most importantly, completely destroys the US ability to put political or moral pressure on other countries to lower tariffs against US goods.

So in order to protect some jobs in an inefficient sector, other US jobs are put at risk in not just steel consuming areas of the economy but also possibly the entire export sector once anti-US retaliatory measures are used to hit back by US trading partners.

Perhaps someone needs to point out to Dubya that compared to the value of liberalisation of the world trading system to a massive high tech external trading nation like the USA, the US steel industry is really not that important in the overall scheme of things. In any case, the whole idea that less competition will make the US steel industry more efficient, well, how does that work? It will just penalize the modern and the more competitive US steel producers in order to protect the less efficient unionised dinosaurs who will go bust in a few years anyway regardless. In the meantime overall competitiveness of US industry suffers versus overseas steel users who have access to steel at the regular non-‘protected’ price. Nice one George.

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